R.M. INVESTMENT & TRADING CO. P. LTD, MUMBAI V. DCIT CEN CIR 2, MUMBAI

ITA 4030/MUM/2010

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2247 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 07-07-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 18-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KADAMBARI DAVE
• Assessee Lawyers: CHETAN KARIA; HARESH P KENIA
• Keywords: Opportunity of being heard; Assessment record
• Section: 147; 144; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'D ' BENCH, MUMBAI BEFORE SHRI D . MANMOHAN, VICE PRESIDENT AND SHRI SANJAY ARORA, ACCOUNTANT MEMBER ITA NOS. 4030, 4034 & 4035/MUM/2010 (ASSESSMENT YEARS: 2002 - 03, 2006 - 07 & 2007 - 08) ITA NOS. 8348, 8352 & 8353/MUM/2011 (ASSESSMENT YEARS: 2002 - 03, 2006 - 07 & 2007 - 08) R.M. INVESTMENT & TRADING CO. P. LTD. DCIT, CENTRAL CIRCLE - 2 9, ROWDAN STREET MUMBAI UDAYACHAL BLDG., FLAT NO. 20 VS. 5TH FLOOR, KOKLATA 700017 PAN - AABCR6026P APPELLANT RESPONDENT APPELLANT BY: SHRI CHETAN KARIA & SHRI HARESH P. KENIA RESPONDENT BY: SHRI GIRISH DAVE & M.S. KADAMBARI DAVE DATE OF HEARING : 15.09.2015 DATE OF PRONOUNCEMENT : 02 .1 2 .2015 ORDER PER SANJAY ARORA, A.M. THESE APPEALS ARE FILED AT TH E INSTANCE OF THE ASSESSEE, AND PERTAIN TO ASSESSMENT Y EARS (A.Y S .) 2003 - 03, 2006 - 07 & 2007 - 08, ARISING OUT OF SEPARATE ORDERS BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 36, MUMBAI (CIT(A) FOR SHORT) FOR THE RELEVANT YEARS U/S. 250(6) OF THE OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER). 2. THE FIRST THREE APPEALS ARISE OUT OF QUANTUM PROCEEDINGS , WHEREAS IN THE SECOND SET OF APPEALS THE ASSESSEE CHALLENGES LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE A SSESSEE HAS RAISED SEVERAL GROUNDS IN THE GROUNDS OF APPEAL ANNEXED TO FORM NO. 36. WITHOUT PREJUDICE TO THIS, REVISED SET OF GROUNDS WERE ALSO FILED IN THE QUANTUM APPEALS WHEREIN THE ASSESSEE MAINLY CHALLENGES JURISDICTION OF THE A SSESSING OFFICER (A O ) I N 2 ITA NO. 4030+5/MUM/2010 R.M. INVESTMENT & TRADINING CO. P. LTD. MAKING THE ASSESSMENT /S , WHICH IS U /S. 144 R.W.S. 153 - C OF THE ACT (FOR A.Y. 2002 - 03 AND A.Y. 2006 - 07) AND U/S. 144 R/W S. 153C FOR A.Y. 2007 - 08. IN THE REVISED GROUNDS OF APPEAL FILED FOR A.Y. 2002 - 03 , THE ASSESSEE DID NOT PRESS G ROUND NO. 7 , WHICH READ S AS UNDER: - '7. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCES OF LOSS AS PER RETURN OF INCOME AMOUNTING TO RS.2,15,866/ - .' SIMILARLY, G RO UND NO. 6 FOR A.Y. 2006 - 07 AND G ROUND NO. 7 FOR A.Y. 2007 - 08 WE RE ALSO NOT PRESSED DURING HEARING . 3. WE SHALL FIRST TAKE UP THE APPEALS ARISING OUT OF QUANTUM PROCEEDINGS WHEREIN THE G ROUNDS WERE WITH REGARD TO THE VALIDITY OF PASSING AN ORDER UNDER SECTION 144 R.W.S. 153 - C (A.Y S . 2002 - 03 & 2006 - 07) AND UNDER SECTION 144 R.W.S. 148 ( FOR A.Y. 2007 - 08 ) . VIDE G ROUND NO. 2 , THE ASSESSEE CONTENDS THAT THE ASSESSEE - COMPANY WAS NOT GIVEN REASONABLE AND SUFFICIENT OPPORTUNITY BY THE FIRST APPELLATE A UTHORITY. VIDE GROUND NO. 3 , IT RAISE S THE ISSUE OF AN INCOMPLETE INVESTIGATION BY THE A.O. BEING RELIED UPON BY THE L EARNED CIT(A), RATHER THAN DIRECTING HIM TO OBTAIN THE FINDINGS OF THE INVESTIGATION BY THE ENFORCEMENT DIRECTORATE IN - AS - MUCH AS THE INFORMATION PROVIDED BY THE SAID DEPARTMENT HAD BEEN RELIED UPON BY HIM . THIS G ROUND IS MISSING IN THE CONCISE GROUNDS FILED FOR A.Y. 2006 - 07. VIDE G ROUND NO. 4 FOR A.Y. 2003 - 04 AN D G ROUND NO. 3 FOR A.Y. 2006 - 07 , THE ASSESSEE CONTENDS THAT AO HAD NOT GRANTED REASONABLE AND SUFFICIENT OPPORTUNITY OF BEING HEARD. THE OTHER GROUNDS ARE ON TH E LEGALITY OF ADDITIONS MADE BY THE AO. 4. AT THE TIME OF HEARING , THE LD. C OUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ARGUMENTS ADVANCED IN THE CASE OF KASHINATH TAPURIAH, DIRECTOR AND CHAIRMAN OF THE ASSESSEE - COMPANY, B E ADOPTED IN TH E S E APPEALS AS WELL. WE NOTICE THAT THAT EVEN BEFORE THE FIRST A PPELLATE A UTHORITY THE ASSESSEE HAS NOT CHALLENGE D THE ORDER OF THE AO ON THE GROUND OF NON - GRAN T OF REASONABLE OPPORTUNITY OF HEARING . WE OBSERVE NO CHALLENGE 3 ITA NO. 4030+5/MUM/2010 R.M. INVESTMENT & TRADINING CO. P. LTD. MADE TO RECOURSE TO SEC TION 144 BY HIM . IN FACT , NOTICES UNDER SECTION 153 - C /148 WERE , AS STATED IN THE ASSESSMENT ORDERS , SERVED THROUGH REGISTERED POST FOR ALL THE THREE YEARS . T HE ASSESSEE - COMPANY DID NOT CHALLENGE THE VALIDITY OF THE NOTICE S OR THE CONSEQUENT PROCEEDINGS BEFORE THE AO. ON THE CONTRARY , IF RESPONDED BY SUBMITTING THAT T HE RETURNS FILED UNDER SECTION 139 BE TREATED AS RETURNS FILED IN RESPONSE TO THE NOTICES ISSUED UNDER SECTION 153 - C /148. COPY OF THE SATISFACTION NOTE UNDER SE CTION 153 - C AS WELL AS COPY OF THE REASONS RECORDED UNDER SECTION 148 WERE FURNISHED TO THE ASSESSEE , EVEN AS IT WAS ALSO NOTED BY THE A.O. THAT IN - AS - MUCH AS THE ASSESSEE - COMPANY DID NOT FURNISH RETURNS IN RESPONSE TO THE NOTICES ISSUED UNDER SECTIONS 153 - C /148 , IT WAS NOT ENTITLED THERETO IN TERM OF GKN DRIVE S HAFTS (INDIA) LTD. VS. ITO [2003] 259 ITR 19 (SC). NO BASIS TO HOLD OF NON - GRANT OF REASONABLE OPPORTUNITY BY THE LD. CIT(A) HAS ALSO BEEN BROUGHT TO OUR NOTICE. 5. THE ONLY CASE OF THE LD . C OUNSEL FOR THE ASSESSEE BEFORE US , I.E., OTHER THAN ON THE MERITS OF THE ADDITIONS/DISALLOWANCES, IS THAT THE AO HAS NOT SERVED NOTICES UNDER SECTION 143(2) OF THE ACT BEFORE COMPLETING THE ASSESSMENT UNDER SECTIONS 144 R.W.S. 153 - C /148 OF THE ACT AND , THE REFORE , THE CONSEQUENT PROCEEDINGS ARE WITHOUT JURISDICTION. ACCORDING THE ASSESSEE - COMPANY , IT FILED RETURNS OF INCOME UNDER SECTION 139 OF THE ACT ON THE FOLLOWING DATES: - (I) A.Y. 2002 - 03 - 31.10.2002 (II) A.Y. 2006 - 07 - 30.11.2006 (III) A.Y. 2007 - 08 - 27.10.2007 IT HAVING COMMUNICATED TO THE AO THAT THE SAID RETURNS, FILED UNDER SECTION 139, BE TREATED AS RETURNS FILED IN RESPONSE TO THE NOTICES UNDER SECTION 153 - C /148, IT WAS WRONG ON THE PART OF THE AO TO OBSERVE THAT THE ASSESSEE HAD NOT FURNI SHED THE RETURN S . 6. THE AO, ON THE OTHER HAND, OBSERVED THAT THE ASSESSEE HAVING NOT FILED THE RETURNS OF INCOME IN RESPONSE TO THE NOTICES ISSUED UNDER SECTION 4 ITA NO. 4030+5/MUM/2010 R.M. INVESTMENT & TRADINING CO. P. LTD. 153 - C /148 OF THE ACT, THERE WAS NO OCCASION FOR HIM TO ISSUE NOTICE /S UNDER SECTION 143(2) OF THE ACT. THE LD . CIT(A) FURTHER OBSERVED THAT THE PRESENT ASSESSM ENTS HAVING BEEN COMPLETED ON 31 ST DECEMBER, 2008 , WITH SECTION 292BB HAVING C OM E INTO FORCE FROM 01.04.2008 , THE ASSESSMENTS MADE BY THE AO CANNOT BE HELD TO BE BAD IN LAW ON ACCOUNT OF THE FACT THAT ASSESSEE APPEARED IN RESPONSE TO THE NOTICES ISSUED UNDER SECTION 148/ 153 - C OF THE ACT AND ALSO DID NOT RAISE ANY OBJECTION WITH REGARD TO NON - SERVICE OF NOTICE/S U/S.143(2). IN OTHER WORDS, THE CASE OF THE LD . CIT(A) IS THAT PROVISION OF SECTION 292BB IS OPERATIVE ON THE DATE OF COMPLETION OF THE ASSESSMENT /S AND , HENCE , ASSESSMENT S MADE, WITHOUT PREJUDICE TO THE FINDING THAT NO RETURN/S WAS FILED BY ASSESSEE, ARE VALID . 7. IT IS NOT IN DISPUTE THAT NOTICE S UNDER SECTION 143(2) W ERE NOT ISSUED FOR THE YEARS UNDER CONSIDERATION AND , HENCE , THE QUESTION AS TO WHETHER THE NOTICE ISSUED IS VALID , OR AS REGARDS ITS SERVICE , DO NOT ARISE FOR OUR CONSIDERATION. THEREFORE THE QUESTION IS AS TO WHETHER SECTION 292BB IS A SUBSTANTIVE LAW OR PROCEDURAL LAW IS OF NO RELEVANCE HERE. 8. HOWEVER, BEFORE US THE L D. C OUNSEL FOR THE ASSESSEE PLACED PROOF OF FURNISHING OF RETURNS THOUGH NO SUCH PROOF WAS PLACED BEFORE THE AO OR CIT(A). THE CASE OF THE ASSESSEE IS TH AT IT HAD FILED RETURNS OF INCOM E UNDER SECTION 139(1) OF THE ACT FOR THE ABOVE THREE ASSESSMENT YEARS . THAT, IN RESPECT OF A.Y. 2002 - 03 ACKNOWLEDGEMENT IS AVAILABLE , AND FOR THE OTHER TWO YEARS UNSTAMPED ACKNOWLEDGEMENTS ARE AVAILABLE . THE L D. C OUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THOUGH IN THE INITIAL PART OF THE ASSESSMENT ORDER IT WAS STATED BY THE AO THAT THE RETURNS WERE NOT FURNISHED , IN THE LATTER PART OF THE ASSESSMENT ORDER ADDITIONS/ DISALLOWANCES HAVE BEEN MADE ON THE BASIS O F THE PROFIT & LOSS ACCOUNT AND BALANCE SHEET FILED ALONG WITH THE ORIGINAL RETURNS SUBMITTED, IMPLYING THAT ASSESSEE FILED THE RETURNS OF INCOME , IN WHICH EVENT ITS REPLY , IN RESPONSE TO NOTICE S UNDER SECTION 153 - C /148, THAT THE ORIGINAL RETURNS 5 ITA NO. 4030+5/MUM/2010 R.M. INVESTMENT & TRADINING CO. P. LTD. FILED SH OULD BE TREATED AS RETURN FILED IN RESPONSE TO THE NOTICES, IS IN ACCORDANCE WITH LAW. 9. THE CASE OF THE REVENUE, ON THE OTHER HAND, IS THAT NO EVIDENCE OF THE RETURNS HAVING BEEN FILED, EVEN AS MUCH AS THE PARTICULARS THEREOF, VIZ. THE DATE OF FILING, WARD/CIRCLE WITH WHICH FILED, RECEIPT NUMBER , ETC. BEING NOT SPECIFIED, NO COGNIZANCE THEREOF COULD NOW BE TAKEN. THE RETURN FOR A.Y. 2007 - 08 IS ADMITTEDLY FILED AT KOLKATA ON 02.07.2007 WHEREAS THE ASSESSEE'S CASE STANDS CENTRALI Z ED WITH CENTRAL CIRCLE - 2, MUMBAI MUCH EARLIER, I.E., VIDE ORDER U/S. 127 DATED 27.03.2007. THE ASSESSEE COULD NOT HAVE THEREFORE FILED ITS RETURN AT KOLKATA, I.E., WITH THE NON - JURISDICTIONAL A.O. , WHO COULD NOT FRAME THE ASSESSMENT OR ISSUE NOTICE U/S.143(2). THE SAME IS THEREFORE NOT A VALID RETURN IN THE EYES OF LAW. THOUGH THE ASSESSEE HAD CHALLENGED THE ORDER PASSED U/S. 127, THE SAME STOOD DISMISSED AND, BESIDES, THERE IS NOTHING TO SHOW THAT THE ORDER DATED 27.03.2007 WAS STAYED BY THE HON'BLE HIGH COURT. 10. THE ISSUE OF THE VALIDITY OF THE ASSESSMENT PROCEEDINGS WITHOUT THE ISSUE OF NOTICE U/S. 143(2), THUS, BOILS DOWN TO WHETHER THE RETURNS U/S.1 39 WERE FILED OR NOT. THE SAME OUGHT NOT, IN OUR VIEW, TO BE DECIDED ON THE BASIS OF PRESUMPTIONS. THE A.O. IS CATEGOR ICAL WITH REGARD TO THE YEARS FOR WHICH THE ASSESSEES RETURNS ARE ON HIS RECORD. IN FACT, HIS ASKING THE ASSESSEE FOR PROOF OF FILING THE RETURNS U/S. 139 IS ITSELF INDICATIVE THAT THE SAME WERE NOT AVAILABLE ON HIS RECORD. THE ASSESSEE, ON ITS PART, HAS ALSO AT NO STAGE CALLED FOR THE INSPECTION OF THE ASSESSMENT RECORD IN MEETING THE ONUS CAST ON IT TO EXHIBIT THE FILING OF THE RETURN/S U/S.139 . FURTHER, THE ADDITIONS/DISALLOWANCES IN ASSESSMENT, ON WHICH IT RELIES TO DRAW AN INFERENCE , ARE ONLY ON THE B ASIS OF THE INCRIMINATING MATERIAL S FOUND DURING SEARCH OR OTHERWISE ON RECORD . THE FIGURES FOR THE RELEVANT YEAR S ARE ALSO AVAILABLE IN THE RETURNS FOR THE OTHER YEARS ON RECORD OF THE REVENUE , VIZ. A.YS. 2001 - 02, 2003 - 04, 2004 - 05 AND 2005 - 06, AS THE BALA NCE - SHEET OF A COMPANY BEARS THE FIGURES FOR THE 6 ITA NO. 4030+5/MUM/2010 R.M. INVESTMENT & TRADINING CO. P. LTD. PRECEDING YEAR AS WELL. AT THE SAME TIME, THE FURNISHING OF THE ACKNOWLEDGMENTS (OF THE RETURNS) BY THE ASSESSEE CANNOT BE DISMISSED OUTRIGHT. FOR A.Y. 2002 - 03 , THE RETURN FILED BY ASSESSEE BEARS A STAMP WIT H DATE , WHEREAS FOR A.Y. 2007 - 08 IT APPEARS TO BE AN ELECTRONICALLY FILED RETURN, BEARING THE DIGITAL SIGNATURE OF ASSESSEE, AND IT IS NOT KNOWN AS TO WHETHER IT WA S FOLLOWED BY A PHYSICAL RETURN, AS REQUIRED BY LAW. SIMILARLY, FOR A.Y. 2006 - 07 , THE ACKNOWLEDGEMENT IS NOT STAMPED. THE AUTHENTICITY OF THE ASSESSEES CLAIM WOULD NEED S PROPER VERIFICATION WHICH COULD BE WITH REF ERENCE TO AND BY EXAMINING THE RECORD S OF THE REVENUE . IF THE RETURNS ARE FILED U/S. 139, THE ASSESSEE MAY BE JUSTIFIED IN RESPONDING TO THE NOTICES ISSUED UNDER SECTION 153 - C /148 BY STATING THAT THE RETURNS ORIGINALLY FILED BE TREATED AS RETURNS IN RESPONSE TO THE ABOVE MENTIONED NOTICES, IN WHICH EVENT THE ASSESSEE - COMPANY CAN RAISE A VALID PLEA WITH REGARD TO VALIDITY OF P ROCEEDINGS COMPLETED WITHOUT ISSUING NOTICE UNDER SECTION 143(2) OF THE ACT. ON THE OTHER HAND, IF THE RETURNS , VALID IN LAW, ARE NOT FOUND TO BE FILED, THE A.O. COULD NOT HAVE ISSUED NOTICE U/S.143(2) AND THE ASSESSMENT STANDS RIGHTLY FRAMED U/S.144 R/W S . 147 / 153 - C . IN THE INTEREST OF JUSTICE, THEREFORE, WE DEEM IT PROPER THAT THE MATTER IS RESTORED TO THE FILE OF THE LD. CIT(A) TO DETERMINE FACTUALLY THE ASPECT OF FILING OF RETURNS BY THE ASSESSEE U/S.139 OF THE ACT BY ISSUING DEFINITE FINDINGS. THE LD. CIT(A) SHALL, IN ADDITION, ALSO EXAMINE THE ISSUE OF THE VALIDITY (OR OTHERWISE) IN LAW OF A RETURN OF INCOME FILED WITH A NON - JURISDICTIONAL A.O., I.E., AS APPERS TO BE THE CASE FOR A.Y. 2007 - 08. THE REVENUE HAS BEFORE US ALSO RAISED THE ISSUE WITH REGARD TO THE PROCEEDINGS BEING VALID EVEN IF THE RETURNS HAD BEEN FILED , RELYING ON THE DECISION IN THE CASE OF ASHOK CHADDHA VS. ITO [2011] 337 ITR 399 (DEL) , RENDERED AFTER CONSIDERING THE DECISION IN ASST. CIT VS. HOTEL BLUE MOON [2010] 321 ITR 362 (SC ). THE SAME , IT WAS ARGUED, HAS SINCE BEEN ADOPTED BY THE TRIBUNAL PER ITS THIRD MEMBER DECISION IN THE CASE OF SUMANLATA BANSAL VS. ASST. CIT (IN ITA NOS. 525 TO 530/MUM/2008 DATED 20.5.2015 - REPORTED AT 2015 - TIOL - 1053 - ITAT - MUM - TM) . THE BASIS FOR SO HOLDING, IT STANDS EXPLAINED, IS THAT IN - AS - MUCH A N A SSESSMENT HAS TO BE 7 ITA NO. 4030+5/MUM/2010 R.M. INVESTMENT & TRADINING CO. P. LTD. NECESSARILY FRAMED U/S.147 OR S. 153 - C , EXAMINING THE ASSESSEES RETURN, NOTICE U/S. 143(2) DOES NOT RETAIN ITS JURISDICTIONAL CHARACTER, ON WHICH BASIS THE SAME, T HOUGH PROCEDURAL, WAS HELD TO BE MANDATORY BY THE HONBLE APEX COURT IN HOTEL BLUE MOON (SUPRA), ON WHICH DECISION THE ASSESSEE PLACES RELIANCE, EVEN CLAIMING ITS CASE IN THIS REGARD TO BE ALSO COVERED BY THE DECISION BY THE HONBLE JURISDICTIONAL HIGH CO URT. THE LD. CIT(A) SHALL, WHERE RELEVANT, DECIDE THIS ASPECT OF THE MATTER AS WELL. THAT IS, ALL THE FACTUAL AND LEGAL ISSUES ARE KEPT OPEN FOR BEING DECIDED BY HIM, OF COURSE AFTER ALLOWING BOTH THE PARTIES BEFORE HIM A REASONABLE OPPORTUNITY TO STATE TH EIR RESPECTIVE CASES. 11. SINCE THE JURISDICTIONAL ISSUE IS SET ASIDE TO THE FILE OF THE CIT(A) FOR DE NOVO CONSIDERATION IN THE LIGHT OF THE MATERIAL PLACED BEFORE US, THE OTHER FACTUAL ISSUES (ON QUANTUM) ARE LEFT OPEN WHICH MAY NEED TO BE CONSIDERE D IN THE EVENT OF DECIDING THE JURISDICTIONAL ISSUE. WITH THESE OBSERVATIONS WE SET ASIDE THE ORDER OF THE CIT(A) , AND TREAT THE APPEALS FILED BY ASSESSEE AS ALLOWED FOR STATISTICAL PURPOSES. 12. PENALTY PROCEEDINGS BEING CONSEQUENTIAL IN NATURE, THE APPEALS ARISING OUT OF THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT ARE ALSO RESTORED TO THE FILE OF THE CIT(A) FOR DE NOVO CONSIDERATION AFTER APPROPRIATELY DECIDING THE ISSUES RAISED IN THE QUANTUM PROCEEDINGS AND , IN PARTICULAR , AFTER DISPOSING THE JURISDICTIONAL ISSUE. 13. IN THE RESULT, THE QUANTUM APPEALS AS WELL AS PENALTY APPEALS ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON DECEMBER 02 , 2015 SD/ - SD/ - ( D. MANMOHAN ) (SANJAY ARORA) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI ; DATED : 02 .1 2 .2015 N . P . 8 ITA NO. 4030+5/MUM/2010 R.M. INVESTMENT & TRADINING CO. P. LTD. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI